eskom
The roadmap for Eskom 2019, and its impact on the IPP industry Jason van der Poel
Alexandra Felekis
On 29 October 2019, the South African Minister of Public Enterprises Pravin Gordhan released, and held a media briefing on, a special paper entitled “Roadmap for Eskom in a Reformed Electricity Supply Industry, 2019” (the Roadmap). The Roadmap highlights the issues that Eskom is currently facing and sets out the government’s plan to address them. Eskom is currently vertically integrated. The aim is for Eskom’s transmission business to be fully functionally separated into a newly formed subsidiary of Eskom Holdings SOC Limited by 31 December 2021, and for the legal separation of the utility into three companies – generation, transmission and distribution – by 30 December 2022. Webber Wentzel sets out below a summary of the Roadmap, and thoughts on some key takeaways flowing therefrom for independent power producers (IPPs), lenders and other stakeholders Words by Jason van der Poel, Alexandra Felekis, Mzukisi Kota and Mongezi Dladla/Webber Wentzel
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Mzukisi Kota
Mongezi Dladla
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SOUTH AFRICAN PROPERTY REVIEW
skom is facing financial, governance and leadership, operational, structural and climate change challenges. The Roadmap makes it clear that Eskom, in its current form, has failed. The Roadmap, in a high-level manner, outlines the process that will be followed in the restructuring of Eskom as well as the actionable steps to mitigate electricity supply risks, and to put Eskom and the electricity supply industry on a new path of sustainability. Among other things, the Roadmap seeks to: ●● Address steps to restore Eskom’s finances, including government support; ●● Identify measures to reduce Eskom’s cost structure; and ●● Commit to a just transition, safeguarding the livelihood of workers and communities in observing South Africa’s climate change commitments.
The new business model Eskom Holdings will hold three subsidiaries – Eskom Generation (Generation Entity), Eskom Transmission (Transmission Entity) and Eskom Distribution (Distribution Entity). The aim is to improve the power utility through greater transparency and accountability, and to allow government more effectively to address generation, transmission and distribution challenges separately. Webber Wentzel notes that the Generation Entity, the Transmission Entity and the Distribution Entity will not become separate state-owned enterprises and will not have any strategic equity partners from the private sector as had been mooted by some stakeholders. In the immediate future, the creation of the Transmission Entity is a priority as it is the keystone in Eskom’s reform. This entity will be wholly owned by Eskom Holdings and “its core functions will be
